UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 5, 2011
Catasys, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | | 001-31932 | | 88-0464853 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California | | 90025 |
| (Address of principal executive offices) | | (Zip Code) |
| | | |
Registrant’s telephone number, including area code (310) 444-4300 |
| |
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On October 5, 2011, Catasys, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Agreement”) with David E. Smith, for $680,000 and issued a senior secured convertible note (the “Note”) and a warrant to purchase an aggregate of 2,615,385 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price of $0.32 per share (the “Warrant”). The exercise price and number of shares of Common Stock of the Warrant are subject to adjustment for financings and share issuances below the initial exercise price.
The Agreement contains customary affirmative covenants for facilities of this type, including covenants pertaining to financial information, notices of default, maintenance of business and insurance, collateral matters, and compliance with laws, as well as customary negative covenants for facilities of this type, including restrictions on the disposition of assets.
The Note matures on January 5, 2012 and bears interest at an annual rate of 12% payable in cash at maturity, prepayment or conversion. The Note and any accrued interest are convertible at the holder’s option into common stock or the next financing the Company enters into in an amount of at least $2,000,000 (a “Qualified Financing”). The conversion price for the Note is equal to the lower of (i) $0.26 per share of Common Stock, and (ii) the lowest price per share of Common Stock into which any security is convertible in any Qualified Financing. The Note is secured by a first priority security interest in all assets of the Company on a pari passu basis with the holder of the secured note issued by the Company on August 17, 2011 (the “Socius Note”).
Effective October 5, 2011, the Company entered into a Consent Agreement (the “Consent Agreement”) with Socius Capital Group, LLC (“Socius”), an affiliate of Terren S. Peizer, Chairman and Chief Executive Officer of the Company, and David E. Smith. The Consent Agreement provided that the maturity date of the the Socius note be extended to January 5, 2011, and provided that consent to the Socius Note and the Note be secured by a first priority security interest in all assets of the Company on a pari passu basis.
The foregoing descriptions of the Agreement, the Consent, the Note and the Warrant do not purport to be complete and are qualified in their entirety by the documents, which are attached as Exhibits 10.1, 10.2, 4.1, and 4.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 5, 2011, the Company issued a Note secured by all of the Company’s assets as described in Item 1.01 of this Current Report on Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On October 5, 2011, the Company incurred a direct obligation to repay $680,000 as described in Item 1.01 of this Current Report on Form 8-K.
Item 3.02 Unregistered Sales of Equity Securities.
On October 5, 2011, the Company issued the Note and the Warrant as described in Item 1.01 of this Current Report on Form 8-K. The issuance was exempt from registration pursuant to the exemption afforded by Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| No. | | Description |
| 4.1 | | Secured Convertible Promissory Note, dated October 5, 2011 |
| 4.2 | | Warrant, dated October 5, 2011 |
| 10.1 | | Securities Purchase Agreement, dated October 5, 2011 |
| 10.2 | | Consent Agreement, dated October 5, 2011 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | CATASYS, INC. |
| | | | |
| Date: October 7, 2011 | | By: | /s/ SUSAN E. ETZEL |
| | | | Susan E. Etzel |
| | | | Chief Financial Officer |
